The data suggest that developed and emerging markets are heading for a massive slowdown in growth, with advanced economies leading the move., and i am now looking for a severe recession that could turn into an economic depression and a severe financial crisis in most advanced economies.
The world need broad policy responses: Avert front-loaded fiscal austerity and provide short-term stimulus; ease monetary policy; provide liquidity to illiquid but solvent sovereigns and private agents; restructure unsustainable private and public debts in an orderly manner; recapitalize banks; restore the competitiveness of struggling economies, possibly through exits from monetary union; invest in workers and long-term productivity growth; encourage emerging markets to pull their weight and help global re balancing.
Instead of concentrating on those subjects, the politicians and the regulators are accumulating mistakes. What a non sense to restrict short selling, as the only buyer now would be the short players; also i am not sure that the new EUR/CHF floor will be solid for a long time, and i would bet that the market is stronger than the Swiss National Bank.
The stress in the financial system and markets is reaching levels not seen since the collapse of Lehman Brothers.
The coming economic contraction could be more severe than that of 2007-09, as the problems were limited to private sector debt and leverage; they have now extended to government debts and leverage;
also, governments could backstop and bailout banks; now, the political backlash against banks and their bailouts is strong and sovereign risk is a source of banking risk as most bonds of near-insolvent sovereigns are held by banks, especially in Europe;
Avoid Equities, as the risk premium will surge above 2008 levels and market growth expectations are revised
Bond market will stay stuck in a Japanlike liquidity trap for years, with poor returns in government debt, but yields stuck at low levels. Central banks will use their balance sheets and other unconventional tools to try to reflate assets, so avoid PIIGS, and buy strong corporate or fiscal strength
Buy USD, Gold and CHF through options. Keep short Eur/Usd
good luck
